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Do ambulatory surgery center owners do more surgery? If so, is that bad?

What are the implications for workers’ comp?

On an anecdotal level, I recently had minor hand surgery at an ASC. The facility was incredibly efficient, with far less bureaucracy than I had experienced with even more minor procedures in a hospital setting.

In looking at the list of the doctors who own the facility and who practice there, I noted that many of the top orthopedic surgeons in the area were participants. Many of these are docs whose integrity and clinical judgment I greatly respect.

But a recently released study by the Workers’ Compensation Research Institute of Cambridge, Mass. attempts to document a pattern of increased surgical utilization by owners of the centers.

Time will tell whether the statistical research done by WCRI on these issues holds up. The data studied was from Florida during 1997 to 2004, focusing on arthroscopies and carpal tunnel surgeries.

The study begins by noting that: “Some studies have found that surgeon owners of ASCs perform more surgeries than surgeons who are not owners (e.g., Mitchell, 2010; Hollingsworth et al., 2010; Gabel et al., 2008; Lynk and Longley, 2002). These studies raise a concern about potential conflicts of interest that may influence treatment decisions and be inconsistent with high priority national goals of containing the rising costs of medical care while maintaining quality care.”

The study, by Christine A. Yee points out that: “In 2011, legislation was passed in California prohibiting doctors who own many kinds of medical businesses from referring their workers’ compensation patients to those businesses, or from using products from those businesses in their practices.2 This law, effective January 1, 2012, requires physicians who own these types of businesses, including ASCs, to inform insurers of their ownership. However, the law allows physician owners of ASCs to send patients to their own ASC for surgery, with payor preauthorization. Previously, California allowed self-referrals to ASCs, yet prohibited self-referrals to other types of entities.”

Why do owned of ASCs do more surgery? There appears to be a recruitment effect, so that doctors who do lots of surgeries tend to buy into ASCs. Also, the study finds that surgeons can do more surgeries in ASCs, which are more efficient. Another reason claimed by the study are financial incentives. Yee claims that: “They increased their surgery volumes by 14 to 22 percent due to the financial incentives, or 15 to 25 surgeries per year for the average surgeon who became an owner—compared with the number of surgeries that each of these surgeons performed prior to becoming an owner. This effect explained 14 to 21 surgeries in the difference in surgeries performed per year between owners and non-owners, or 18 to 33 percent.”

Another factor was improvement in medical technology.

The WCRI charges that ASCs have tended to increase workers’ comp volume: “Relative to the types of patients they would have treated had they not been owners, ASCs provided more surgeries to patients covered by workers’ compensation, commercial indemnity insurance, and Medicare. These payors were higher-paying insurers at the time of the data. Due to owner financial incentives, the average surgeon increased the number of workers’ compensation patients by 17 to 23 percent and the number of patients with commercial indemnity insurance by 20 to 51 percent. Surgeons did not increase the number of patients covered by Medicaid and certain health maintenance organization (HMO) plans.”

It is important to note that the WCRI study does not claim that the surgeries that were done were not necessary or that the surgeries had bad outcomes.Specifically, the study says” “This study did not address whether any of the additional surgeries (due to financial incentives, increased capacity from expanding one’s network, or ASC efficiency gains) were necessary or not. We also did not address whether they were cost-effective or not. If medically necessary and cost-effective, then increasing surgeon ownership would have improved access to surgical care for those who previously did not have access, in particular, those covered by workers’ compensation, commercial indemnity insurance, and Medicare. If the surgeries were not all necessary, then increasing surgeon ownership would be a cost driver and merit increased regulatory attention. This question deserves additional research using data on patient outcomes.”

The WCRI study makes various general recommendations for payers and policymakers but notes that ASCs have many advantages, including costs.

Concluding, the WCRI study notes that: “We speculate that physician ownership and the role of ASCs will become a bigger issue for injured workers and workers’ compensation payors in the next decade. The use of ASCs for orthopedic services and pain management services is growing rapidly (Koenig et al., 2009). ASCs may become as dominant a setting for services treating musculoskeletal and nervous system conditions as they are for eye surgery and gastroenterology today. Management companies of ASCs indicate orthopedics as the most desirable medical specialty in which to do business (Fields, 2011). Since many injured workers today are treated with these types of services, we may expect the issue regarding physician ownership of ASCs to receive more attention by regulators that oversee workers’ compensation systems in the future.The efficacy of current policies intended to counteract adverse effects of physician ownership has not been determined. The optimal policy would curtail any adverse effects, while encouraging medical innovation focused on producing high quality and cost-effective care.”

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About Julius Young

A Partner at Boxer & Gerson LLP, Julius has practiced worker’s compensation and social security disability law since 1979. He has represented thousands of individuals who have sustained life-changing injuries or illnesses while on the job. In every case, his goal is to secure the medical treatments his clients need.